Joe Fast started a mobile snack food service on January 2, 2003, investing

$12,000 cash deposited in a bank account in the name of “Fast Snacks.” He purchased a second-hand, fully equipped truck. Joe operated on the cash basis of accounting, and at year’s end, he asks you to help him find his income or loss for the first year of operation. You have determined the following:

a. He purchased a $25,000 truck that is depreciable at 20 percent per year. He paid $10,000 cash from his funds and financed $15,000 on a note at 8 percent interest.

b. He started the operation with $2,000 cash available.

c. He has $324 cash on hand and $27,255 cash in the bank.

d. His receipts for cash purchases of inventory for resale total $29,648.

e. The value of his ending inventory for resale is $575.

f. He paid $914 cash for all truck operating costs and in addition, he has an unpaid invoice for a recent truck repair in the amount of $157.

g. He informed you that he took $1,500 a month for 12 months to use for living and other personal expenses.

h. He paid $1,200 of interest on the truck loan.

You discover Joe kept no record of the cash sales he made during the year. Cash sales revenue must be determined from the information already noted. Show Joe how cash sales were determined and prepare an income statement using accrual accounting to show his operating income for the year.